TOKYO - Battered by a slumping North American auto market and unfavorable currency swings, Toyota is forecasting a double barrel of bad news this fiscal year: its first year-on-year sales slide in nine years and first profit slip in seven years.
The list of problems is growing for Toyota, including soaring material and energy costs and a stagnant auto market in Japan, its home market. A weak dollar, now hovering at about 100 yen compared with nearly 120 yen last year, erodes the income of Japanese exporters like Toyota.
Toyota Motor Corp., the maker of the Prius gas-electric hybrid and Camry sedan, reported Thursday a 28 percent tanking in net profit for the January-March quarter to 316.8 billion yen ($3.05 billion) — the first quarterly decline in profit since April-June 2005.
Sales rose 3.8 percent in the most recent quarter to 6.567 trillion yen ($63.14 billion). “There is no mistake that things are seriously tough — even for Toyota,” said Tsuyoshi Mochimaru, auto analyst at Lehman Brothers in Tokyo.
Mochimaru warned the sales strides Toyota is making in China and other relatively new regions probably won’t be enough to make up for the battering it’s taking in the key North American market.
Toyota has been gradually switching its focus to emerging markets, but it still makes about a third of its sales in North America.
Still, Mochimaru noted Toyota tends to be conservative and is mapping out the worst possible scenario. And it could emerge with better results, as long as exchange rates stay stable, he said. Toyota had been on a roll with the success of its fuel-efficient models, including the Prius and the Corolla subcompact, which have gotten a boost from rising gas prices. But recent credit woes in North America have dampened sales in recent quarters.